Jump to content
House Price Crash Forum
Sign in to follow this  
TheCountOfNowhere

Backdoor Funding For Landing Scheme Replacement

Recommended Posts

From the BoE clueless thread.

http://uk.reuters.com/article/2014/01/16/uk-britian-boe-repos-idUKBREA0F14Z20140116

Quote

"British banks will be able to get cash from the Bank of England on easier terms from February 11 onwards to help avoid a repeat of the liquidity shortages that occurred in the financial crisis, the central bank said on Thursday.

They will be able to offer up lower-quality assets than now as collateral. The amount of money available will also fluctuate depending on the market environment rather than being a set amount.

Governor Mark Carney said in October he planned to make it easier for banks to use the lower-quality collateral to get funds - albeit at a price.

He was responding to a review ordered by the central bank's board that said changes since the financial crisis had not gone far enough."

Read the linkl, it's shocking. A return to reckless lending if you ask me. FLS was chicken feed compared to what this could represent.

Edited by TheCountOfNowhere

Share this post


Link to post
Share on other sites

Read this earlier and felt the instant rage.

may as well just piss any savings away. House prices will rise forever and the wheels will keep turning.

Sub-prime anyone?

House prices will rise until the currency/government collapses.

I predict a downgrade very soon......

AAAAAAAAAAAAAAAAAAAARRRRRRRRRRRRRRRRRRRRRRRRRGGGGGGGGGGGGGGGGGGGHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH!!!!!!!!!!!!!!!!!!!!!!!!!

Edited by TheCountOfNowhere

Share this post


Link to post
Share on other sites

Mayby it's time to accept that it's just the way the shitty system works.

House price hyperinflation.

Currency debasement.

House price hyperinflation.

Currency debasement.

House price hyperinflation.

Currency debasement.

House price hyperinflation.

Currency debasement.

House price hyperinflation.

Currency debasement.

House price hyperinflation.

Currency debasement.

....

and so on.

Share this post


Link to post
Share on other sites

Mayby it's time to accept that it's just the way the shitty system works.

House price hyperinflation.

Currency debasement.

House price hyperinflation.

Currency debasement.

House price hyperinflation.

Currency debasement.

House price hyperinflation.

Currency debasement.

House price hyperinflation.

Currency debasement.

House price hyperinflation.

Currency debasement.

....

and so on.

that's only happened the once.

Share this post


Link to post
Share on other sites

Do you mean this time?

http://en.wikipedia.org/wiki/Stop_of_the_Exchequer

I think the idea after that was that the state would default a little bit every day through inflation rather than building up a shitstorm of default all at once.

Looks like were going to try the shitstorm of default all at once approach again :)

i hope this is sonething and nothing but it seems to me the vanjs are veing handed as much cheap money as they need....now what will they use that for?

we can only hope the prices are so silly already no one has any appetite to buy/borrow.

Share this post


Link to post
Share on other sites

From the BoE clueless thread.

http://uk.reuters.co...EA0F14Z20140116

Quote

"British banks will be able to get cash from the Bank of England on easier terms from February 11 onwards to help avoid a repeat of the liquidity shortages that occurred in the financial crisis, the central bank said on Thursday.

They will be able to offer up lower-quality assets than now as collateral. The amount of money available will also fluctuate depending on the market environment rather than being a set amount.

Governor Mark Carney said in October he planned to make it easier for banks to use the lower-quality collateral to get funds - albeit at a price.

He was responding to a review ordered by the central bank's board that said changes since the financial crisis had not gone far enough."

Read the linkl, it's shocking. A return to reckless lending if you ask me. FLS was chicken feed compared to what this could represent.

I supose it depends on what the ``at a price`` price is ,what was the price of FLS cash 0.5% ?

But it`s starting to look like they are about tostart buying bad debt

Share this post


Link to post
Share on other sites

I supose it depends on what the ``at a price`` price is ,what was the price of FLS cash 0.5% ?

But it`s starting to look like they are about tostart buying bad debt

so they can lend again, or so they can survive?

Share this post


Link to post
Share on other sites

so they can lend again, or so they can survive?

When are the new capital reserve requirements due to start or are they already here? swap $hit for capital?

So they could lend would depend on the cost ,and lets be honest they struggled to do that under FLS and I can`t see it getting any cheaper than that well here's for hoping anyway

Share this post


Link to post
Share on other sites

so they can lend again, or so they can survive?

FLS is a four year collateral swap. By the end of 2016 the banks will have all the non-performing crap back on their books - not good for lending or profitability. How much better to offload the lower-quality MBS shit on the BoE on a permanent basis? In deciding to stuff the Bank's balance sheet with garbage Carney is simply following Bernanke's example yet again.

Share this post


Link to post
Share on other sites

so they can lend again, or so they can survive?

Hopefully the survival choice, not new lending.

The lenders need to be able to withstand a crash, then opportunity to write out millions of new mortgages on much lower house prices. For the potential of massive long term profits.

What use to a bank, is a grotty standard semi, bid to such crazy heights of value, that so many older home-owners owns outright, or have very little debt on?

Say currently valued at £400,000 ? And there's loads of such houses. Only use they have is to help with the market value book of their existing current mortgages, perhaps, or a few owners who tap into expensive equity release.

When the banks have been writing very few mortgages (historically), and where many have been paying down final mortgage debt on its current mortgage book, to become mortgage free on their homes (I had the figures a while ago on maturing mortgages, paid off every month, past few years).

Best to get into a position where you can withstand HPC, and let it happen? Use some pretext for why HPC now has to happen, 'couldn't see it coming sorry debtors', either limiting lending or increasing rates Much more supply coming to market by owners looking to cash in.

Then all the younger priced out generations, who held back from being in jumbo debt, given opportunity to buy such £400,000 houses, but at post-crash rebalanced prices. Say grotty 3 bed semi is now £200,000 to buy, with £175,000 mortgage over 25 years.

£175,000 mortgage, even at just 4% rate, bank(s)/financial system, can book a £102,114.34 profit on each mortgage, and instantly help with their recapitalisation when lending in volume like that. Total repayment to lender on £175,000 mortgage = £277,114.34. Mass volume lending, hundreds of thousands of new borrowers, getting new mortgage debt on all those homes owned outright. Banks making huge profits again. Rebalance and fairness into the system. New buyers not overly stretched with mortgage, able to also spend money doing up their homes, and buying stuff from the shops, to up velocity in economy.

Share this post


Link to post
Share on other sites

If you are hoping for any sort of interest on your savings - just forget it once and for all. They don't need them. Indeed, they don't even like you.

You're not joking.

A definite vote winner :lol::lol::lol::lol::lol::lol:

If you ask me the independent ( from government and the british public ) BoE seems to be supporting the banks instead of the people, this seems...wrong.

Serious question...the BoE say they have stopped Q.E. (for now ) but doesn't this represent the same thing ?

Edited by TheCountOfNowhere

Share this post


Link to post
Share on other sites

I supose it depends on what the ``at a price`` price is ,what was the price of FLS cash 0.5% ?

But it`s starting to look like they are about tostart buying bad debt

The Skinhead Bankers will suffer a haircut.

Share this post


Link to post
Share on other sites

You're not joking.

A definite vote winner :lol::lol::lol::lol::lol::lol:

If you ask me the independent ( from government and the british public ) BoE seems to be supporting the banks instead of the people, this seems...wrong.

Serious question...the BoE say they have stopped Q.E. (for now ) but doesn't this represent the same thing ?

I always thought that of FLS

Share this post


Link to post
Share on other sites

Qe is used by the BoE to control the long end of the yield curve ie long term rates. By buying long treasuries they push up the price, pushing down yield and so controlling long term rate. They also allow excess reserves into the system, so nailing rates to the floor.

Fls and this are more standard liquidity providing operations. Allowing banks to fund their assets. Fls had the targeted nature but this is just general collateralised funding. Something banks do all the time with each other. And the boe does too, just normally with better collateral requirements and more stigma attached.

Share this post


Link to post
Share on other sites

Qe is used by the BoE to control the long end of the yield curve ie long term rates. By buying long treasuries they push up the price, pushing down yield and so controlling long term rate. They also allow excess reserves into the system, so nailing rates to the floor.

Fls and this are more standard liquidity providing operations. Allowing banks to fund their assets. Fls had the targeted nature but this is just general collateralised funding. Something banks do all the time with each other. And the boe does too, just normally with better collateral requirements and more stigma attached.

Thanks ,makes more sense to me now

Would I be right in thinking what they are doing now will lower the interest rate charged on loans issued by the bank as the banks will exchange risky/bad assets for capital at a much lower cost from the BOE than they would have to pay on the open market? (obviously depending on what the BOE prices is ) if so it`s FLS in all but name isn't it ?

Share this post


Link to post
Share on other sites

Thanks ,makes more sense to me now

Would I be right in thinking what they are doing now will lower the interest rate charged on loans issued by the bank as the banks will exchange risky/bad assets for capital at a much lower cost from the BOE than they would have to pay on the open market? (obviously depending on what the BOE prices is ) if so it`s FLS in all but name isn't it ?

Looking at that initial link it says the repo facility will now have three tiers of collateral - top tier government bonds, second tier government and corporate bonds and a third tier which includes banks' loan portfolios. The key in relation to FLS is whether a bank's mortgage portfolio (or mbs backed by it) is eligible for that third tier, which incidentally will have more punitive rates and haircuts. For FLS, banks created MBS backed by their residential loans then used these as collateral for the FLS. If these MBS qualify as collateral for that third tier then It will in some way replicate the FLS. But still depends on what that punitive rate is for this tier capital relative to FLS rates, and also relative to market rates for the repo of that collateral.

Share this post


Link to post
Share on other sites

If you ask me the independent ( from government and the british public ) BoE seems to be supporting the banks instead of the people, this seems...wrong.

It's a Central Bank.

They call it that because it stands in the centre between bankers and people, diverting money from the people to the banks.

Share this post


Link to post
Share on other sites

Backdoor Funding For Landing Scheme Replacement

I thought it was too good to be true....

:lol:

Think they're bracing themselves for a hard landing.

Share this post


Link to post
Share on other sites
They will be able to offer up lower-quality assets than now as collateral. The amount of money available will also fluctuate depending on the market environment rather than being a set amount.

Every successive scheme seems to allow lower and lower quality assets to be used to secure money from the BoE at lower and lower cost.

What are the BoE lending against now - Payday loans??? :angry:

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   205 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.